China's WH Group, the world's biggest pork company, has cancelled its planned Hong Kong IPO as a downturn in equity markets weighed further on demand even after it cut the offer size by two-thirds.

The decision is a setback in the company's effort to cut the large debt it took on to seal the $4.9 billion acquisition of Smithfield Foods last year.

It also caps a tumultuous four weeks for WH Group, during which the company and its bankers faced mounting questions from investors skeptical of paying top valuation in the IPO without clear signs of cost savings from the combination with Smithfield, sources involved in the deal have said.

"In light of deteriorating market conditions and recent excessive market volatility, the company, having consulted the joint sponsors, has decided that the global offering will not proceed at this time," WH Group said in a securities filing late on Tuesday.

The company last week slashed the offer size by two-thirds. This was a result, fund managers and bankers said, of WH Group and its owners seeking too high a price, hiring too many underwriters - a record 29 - as well as negative publicity over some sky-high executive compensation.

It also had bad luck as sentiment towards new listings slid worldwide.

"If market conditions improve, the deal might be revived at some point, but it's hard to set a date at this point in time," a source involved in the deal said. Sources familiar with the IPO declined to be named as they were not authorized to speak publicly on the matter.

WH Group, whose products include Smithfield ham and Farmland bacon in the United States, offered 1.3 billion new shares in a revised deal valued at up to HK$14.61 billion ($1.9 billion).

It had marketed the IPO in an indicative range of HK$8.00 to HK$11.25 per share.

The IPO was cut last week from the original size of up to $5.3 billion which involved WH Group and a group of shareholders including private equity firms CDH Investments and New Horizon, Goldman Sachs and Singapore state investor Temasek Holdings selling shares.

WH Group had planned to use $4 billion of the original IPO proceeds to pay down the loan it took with a group of banks to buy Smithfield.

The loan has two tranches, one maturing in 2016 that pays interest equivalent to the London Interbank Offered Rate (Libor) plus 3.5 percent and another maturing in 2018 that pays Libor plus 4.5 percent, leaving the company with some time to raise funds from other sources to meet debt payments.

WH Group hired a record number of underwriters for the deal, surpassing the previous all-time high of 21 mandated for China Galaxy Securities' $1.1 billion IPO last year.